The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Adtalem (NYSE:ATGE) and the rest of the education services stocks fared in Q3.
A whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.
The 8 education services stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.2% while next quarter’s revenue guidance was in line.
Luckily, education services stocks have performed well with share prices up 11.7% on average since the latest earnings results.
Adtalem (NYSE:ATGE)
Formerly known as DeVry Education Group, Adtalem Global Education (NYSE:ATGE) is a global provider of workforce solutions and educational services.Adtalem reported revenues of $417.4 million, up 13.2% year on year. This print exceeded analysts’ expectations by 5%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ EPS estimates.
“We entered year two of our three-year Growth with Purpose strategy with strong momentum, further integrating our tech-enabled platform and expanding our impact through innovative partnerships,” said Steve Beard, president and chief executive officer, Adtalem Global Education.
Adtalem scored the biggest analyst estimates beat and highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 38.7% since reporting and currently trades at $103.99.
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Best Q3: Strategic Education (NASDAQ:STRA)
Formed through the merger of Strayer Education and Capella Education in 2018, Strategic Education (NASDAQ:STRA) is a career-focused higher education provider.Strategic Education reported revenues of $306 million, up 7% year on year, outperforming analysts’ expectations by 1.5%. The business had an exceptional quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ adjusted operating income estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $96.84.
Weakest Q3: Bright Horizons (NYSE:BFAM)
Founded in 1986, Bright Horizons (NYSE:BFAM) is a global provider of child care, early education, and workforce support solutions.Bright Horizons reported revenues of $719.1 million, up 11.4% year on year, exceeding analysts’ expectations by 0.8%. Still, it was a decent quarter with earnings exceeding analysts’ expectations.
Bright Horizons delivered the weakest full-year guidance update in the group. As expected, the stock is down 13.3% since the results and currently trades at $115.09.
Lincoln Educational (NASDAQ:LINC)
Established in 1946, Lincoln Educational (NASDAQ:LINC) is a provider of specialized technical training in the United States, offering career-oriented programs to provide practical skills required in the workforce.Lincoln Educational reported revenues of $114.4 million, up 14.8% year on year. This print beat analysts’ expectations by 3.3%. It was a strong quarter as it also produced an impressive beat of analysts’ adjusted operating income estimates and full-year EBITDA guidance topping analysts’ expectations.
The stock is down 1.1% since reporting and currently trades at $16.03.
Perdoceo Education (NASDAQ:PRDO)
Formerly known as Career Education Corporation, Perdoceo Education (NASDAQ:PRDO) is an educational services company that specializes in postsecondary education.Perdoceo Education reported revenues of $169.8 million, down 5.6% year on year. This number surpassed analysts’ expectations by 3.2%. Overall, it was a strong quarter as it also logged EPS guidance for next quarter beating analysts’ expectations and a decent beat of analysts’ EPS estimates.
Perdoceo Education had the slowest revenue growth among its peers. The stock is up 11.2% since reporting and currently trades at $27.65.
Market Update
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.Want to invest in winners with rock-solid fundamentals? Check out our and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
This content was originally published on Stock Story
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